Economics Flashcards
1
Q
Economics
A
The science that studies the choices of people trying to satisfy their wants in a world characterized by scarcity
2
Q
Scarcity
A
Wants greater than resources
3
Q
Opportunity Cost
A
What you give up to do what you are doing
4
Q
Zero Opportunity Cost
A
Exists when someone doesn’t give up anything in choosing to do something else
5
Q
Macroeconomics
A
The big picture
6
Q
Satisfaction
A
Utility
7
Q
Choice
A
A consequence of scarcity
8
Q
Zero Price
A
No dollars or cents are charged for a good
9
Q
Free Rider
A
Receives the benefits but does not pay anything
10
Q
Private Good
A
Benefits of the good can be denied to a person
11
Q
Public Good
A
Benefits of the good cannot be denied to anyone
12
Q
Contract
A
An agreement between two or more people to do something
13
Q
Total Revenue
A
Price times number of units sold
14
Q
Incentive
A
Encourages or motivates a person toward action
15
Q
Law of Demand
A
Price and quantity demanded move in opposite directions
16
Q
Law of Diminishing Marginal Utility
A
Eventually the utility of additional unit decreases
17
Q
Quantity Supplied
A
Specific number of units of a good produced and offered for sale at a specific price
18
Q
Unit Elastic
A
Percentage change in quantity demanded equals percentage change in price
19
Q
Increase in Resource Prices
A
Will end up shifting supply curve to the left
20
Q
Normal Good
A
Income rises, demand for good rises
21
Q
Substitutes
A
Price of good A moves in the same direction as demand for good B
22
Q
Shortage
A
Exists when quantity demanded is greater than quantity supplied
23
Q
Surplus
A
Exists when quantity supplied is greater than quantity demanded
24
Q
Equilibrium Price
A
The price that exists in the market when the quantity supplied of a good equals the quantity demanded
25
Equilibrium
The market setting in which the quantity supplied of a good equals the quantity demanded
26
Brute Force
A rationing device that is not commonly used today in the United States
27
Price
A commonly used rationing device in the United States
28
Fixed Cost
Does not change as business firm produces more units of a good
29
Board of Directors
Chosen by the stockholders of the firm
30
Corporation
Form of business organization in which owners have unlimited liability
31
Marginal Revenue
Additional revenue gained from selling an additional unit of a good
32
Partnership
Form of business organization in which owners have unlimited liability
33
Stockholder
One of the owners of the corporation
34
Total Cost
Fixed cost plus variable cost
35
Government Monopoly
Legally protected from competition
36
Copyright
Like a patent, but for authors or publishers
37
Perfect Competition
A market in which firms have no control over price
38
Monopolist
Single seller of a good
39
Monopolistic Competition
Many sellers and slightly differentiated products
40
Oligopoly
Few sellers and identical or slightly differentiated products
41
Patent
Effective for 17 years
42
Equilibrium Wage Rate
The wage rate at which the quantity of labor supplied equals the quantity demanded
43
Right-To-Work-Law
Law that makes it illegal for employers to requre union membership as a condition of employment
44
Minimum Wage
A wage rate determined by Congress
45
Unemployment Rate
The number of persons unemployed divided by the number of persons in the civilian labor force
46
Closed Shop
An organization that hires only union members
47
Union Shop
An organization that does not require individuals to be union members in order to be hired but does require them to join the union within a certain period
48
A Retired Person
An example of a person not in the labor force
49
A Person on Strike
An example of an employed person
50
Positive Balance of Trade
Exports greater than imports
51
Negative Balance of Trade
Exports less than imports
52
Comparative Advantage
Producing at lower opportunity cost
53
Tariff
A tax on imported goods
54
Quota
A legal limit on the amount of a good that may be imported
55
Infant-Industry Argument
Idea that new industries have to be given time to develop
56
Dumping
Selling below cost and below the price domestic residents are asked to pay
57
Appreciation Occurs
When a nation's currency fetches more of some other nation's currency
58
Cooperative
A business that provides services to its members and is not run for profit
59
Sole Proprietorship
A business that is owned by one individual who makes all business decisions, receives all the profits or takes all the losses of the firm, and is legally responsible for the debts of the firm
60
Limited Partner
In a limited partnership, a partner who cannot participate in the management of the firm and who has limited liability.
61
General Partner
In a limited partnership, a partner who is responsible for the management of the firm and who has unlimited liability
62
Dividend
A share of the profits of a corporation distributed to stockholders
63
Asset
Anything of value to which the firm has legal claim
64
Bond
A statement of debt issued by a corporation. The corporation promises to pay a certain sum of money at maturity and also to pay periodic fixed sums until that date
65
Franchise
A contract by which a firm (usually a corporation) lets a person or group use its name and sell its goods in exchange for certain payments being made and certain requirements being met
66
Marginal Costs
The change in total cost that results from producing an additional unit of output
67
Variable Costs
Cost, or expense that changes with the number of units of a good produced
68
Profit
The amount of money left over after all the costs of production have been paid. Profit exists whenever total revenue is greater than total costs.
69
Wage Rate
The price of labor
70
Minimum Wage Law
A federal law that specifies the lowest hourly wage rate that can be paid to workers, this law is established by Congress
71
Labor Union
An organization that seeks to increase the wages and improve the working conditions of its members
72
Taft-Harley Act
An act, passed in 1947 by the U.S. Congress, which gave states the right to pass right-to-work laws. These right-to-work laws prohibit employers from establishing union membership as a condition of employment
73
Downsizing
Restructuring a firm and decreasing its size so that it is a less costly, more productive, more efficient operation
74
Global Competition
Competition from all over the world. American business firms and workers today are said to be faced with global competition.
75
Technology
The body of skills and knowledge concerning the use of resources in production
76
Barter Economy
An economy in which trades are made in goods and services instead of money
77
Double Coincidence of Wants
The situation in which each of two parties to an exchange has what the other wants
78
Money
A good that is widely accepted for the purposes of exchange
79
Face Value
The stated denomination on paper money or coins
80
Checking Account
A deposit that is withdrawable on demand and transferable by means of a check. It is also known as a demand deposit and is the largest component of the money supply
81
Near Money
Assets, such as non checking savings accounts, that can be easily and quickly turned into money
82
Debit Card
A card that can be used to withdraw funds at automated teller machines and to pay for purchases by electronically transferring funds from one account to another
83
Money Supply
The total supply of money in circulation, composed of currency, checking accounts, and traveler's checks.
84
Reserve Requirement
A regulation which requires a bank to keep a certain percentage of each dollar deposited in the bank in its reserve account at the Fed or in its vault (as vault cash)
85
Open Market Operations
Buy and selling of government securities by the Fed
86
Discount Rate
The interest rate the Fed charges a member bank for a loan
87
Federal Funds Rate
The interest rate one bank charges another bank for a loan
88
Demand-Side Inflation
An increase in the price level that originates on the demand side of the economy
89
Supply-Side Inflation
An increase in the price level that originates on the supply side of the economy
90
Deflation
A decrease in the price level
91
Full Employment
The situation that exists when the official unemployment rate equals the natural unemployment rate
92
Frictional Unemployment
Refers to workers who have lost their jobs because of changing market (demand) conditions and who have transferable skills
93
Structural Unemployment
Refers to workers who have lost their jobs because of changing market (demand) conditions and whose skills do not match the requirements of available jobs
94
Specialize
To do only one thing. For example, when a country specializes in the production of a good, it produces only that good.
95
Comparative Advantage
The situation in which a country can produce a good at a lower opportunity cost than another country
96
Economic Integration
When nations combine to form either a common market or a free-trade area
97
NAFTA (North American Free Trade Agreement)
Created a free trade area for Canada, the United States, and Mexico
